The New Bankruptcy Law

The draft Code of “Settlement of Debts and Granting of a Second Chance” is expected to replace entirely the existing Bankruptcy Code. The statute of bankruptcy revocation, falls into the provisions which are expected to be amended with the draft Code.

More specifically, with respect to the compulsory revoked actions, the current legislation provides that those are revoked, under the prerequisite that they are damaging to the creditors, and that same took place within the “suspicious period”, i.e. the period between the cease of payments and the declaration of bankruptcy. On the other hand, the draft Code provides that not only actions effected during the suspicious period are subject to revocation, but also those actions effected within six (6) months prior to the commencement of the suspicious period. Furthermore, with respect to the potentially revoked actions, the current legislation sets two (2) prerequisites, namely the knowledge of the counterparty that the debtor has ceased payments, as well as the fact that the action was damaging to the creditors. On the other hand, the draft Code expands the scope of potentially revoked actions, by providing that the action could be revoked, if the counterparty was aware or could simply assess that the action would be damaging to the creditors.

In conclusion, the draft Code sets fresh provisions, and amends existing ones, however in an overall it appears to maintain the philosophy of the current legislation.